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Release No. 33-6108 Release No. 34-16112 Release No. IC-10842 August 16, 1979
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 Table of Contents
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I. Introduction
Rule 13e-4 ("Rule") and Schedule 13e-4 ("Schedule") were proposed for public comment on December 14, 1977. 3 In response to the proposal, the Commission received eighteen letters of comment from interested persons. The Commission has considered these comments, and, where appropriate, has made certain modifications in the Rule and Schedule as proposed. The regulatory approach taken in the Rule, however, is unchanged. As noted in the 1977 Release, 4 the requirements of the Rule are patterned substantially on the regulatory scheme established by Section 14(d) of the Act and existing rules thereunder which are applicable in the context of third party tender offers. The requirements of the Rule reflect, where appropriate, proposed revisions in the rules under Section 14(d) which the Commission published for comment in 1976 and republished in revised form in February 1979. 5 The information required to be disclosed in Schedule 13E-4 is substantially the same type of information which is required by Schedule 14D-1. 6
As noted in the 1977 Release, prior to this time, the Commission has not exercised its rulemaking authority under Sections 13(e) and 14(e) of the Act to regulate directly the manner in which issuer tender offers must be made, although such offers have been and remain subject to the general antifraud and anti-manipulative provisions of the Act, such as Section 10(b) and Rule 10b-5 thereunder, and Section 14(e). 7
II. Statutory Background
The Commission has adopted Rule 13e-4 under seven sections of the Act, including Sections 13(e) and 14(e).88 8 Sections 13(e) and 14(e) expressly grant the Commission authority to adopt rules which define, and prescribe means reasonably designed to prevent fraudulent, deceptive or manipulative activity in connection with purchases by an issuer of its own securities, and in connection with any tender offer, respectively.
Some commentators raised questions regarding the Commissions authority to adopt a rule which would regulate the manner in which tender offers by issuers must be made. Those commentators suggested that, based upon the legislative history of the sections of the Act under which the Rule has been adopted, particularly Section 13(e), the Commissions authority is limited to promulgating disclosure requirements in connection with such offers. The Commission does not agree.
Sections 13(e) and 14(e) were added to the Act by the Williams Act amendments of 1968. 9 A primary purpose of the Williams Act was to extend existing federal regulation of contests for corporate control, which was generally limited to proxy contests, in order to protect investors in the context of tender offers. 10 As originally proposed and adopted, Section 14(d) excepts issuer tender offers from the substantive and disclosure requirements contained therein. 11 Section 13(e) of the Act, however, empowers the Commission to define manipulative, deceptive and fraudulent acts and practices with respect to issuers repurchases of their own securities, whether by tender offer or otherwise, and to adopt means reasonably designed to prevent such acts and practices. 12 The Section applies to any issuer which has a class of equity securities registered under Section 12 of the Act, or which is a closed-end investment company registered under the Investment Company Act of 1940. Such issuers may not make purchases of any of their equity securities in contravention of rules adopted by the Commission under Section 13(e). In addition, Section 14(e) broadly prohibits any person from engaging in any fraudulent, deceptive or manipulative act or practice in connection with any tender offer, and grants the Commission rulemaking authority, similar to its rulemaking authority under Section 13(e), to define and prescribe means reasonably designed to prevent such activity. 13
Thus, although the legislative history of the Williams Act indicates that the Commissions rulemaking authority under Section 13(e) is not unlimited, the Commission is not restricted to adopting exclusively disclosure requirements in connection with purchases by an issuer of its own securities. As the Commission stated in proposing Rule 13e-3 for comment:
Neither the language Section 13(e) nor its legislative history limits the rulemaking authority of the Commission to disclosure requirements. Consequently, in adopting rules for the protection of investors and in the public interest to prescribe means reasonably designed to prevent fraudulent, deceptive or manipulative acts or practices, Commission rulemaking under Section 13(e) may include substantive provisions as well as disclosure requirements. 14
In response to the suggestion of one person who testified during the hearings on the Williams Act that issuers should be subject to Section 14(d), 15 the Commission emphasized that the concerns raised by issuer tender offers may vary from those raised by tender offers made by third parties in an attempt to gain control of the issuer. 16 The Commission informed Congress that:
if the Commission is given rulemaking power with respect to issuers purchases as provided in the bill, it could, and presumably would, provide separately for tender offers by issuers following the provisions of Section 14(d) to the extent appropriate. 17
The Commission has determined that regulation of issuer tender offers under Rule 13e-4 is appropriate to ensure that issuer tender offers are conducted in a manner free of the deceptive, manipulative and fraudulent acts and practices set forth in paragraph (b) of the Rule. By providing a regulatory framework governing issuer tender offers, Rule 13e-4 responds to a major Congressional concern underlying the Williams Act to ensure that tender offers are conducted on appropriate terms and conditions in light of the special market and investment decision problems which attend such offers. 18
III. Coverage of the Rule
A. Tender Offers by Persons in a Control Relationship with the Issuer
As proposed, the Rule would have included within its scope tender offers for an issuers securities made by a person in a control relationship with the issuer by operation of Section 13(e)(2) of the Act. 19 In response to the Commissions request for comment on whether control persons should be exempted from some or all of the provisions of the Rule, 20 most commentators suggested that such an exemption was appropriate inasmuch as tender offers by control persons currently are subject to Section 14(d) of the Act and the rules thereunder.
The Commission has determined that additional regulation of such tender offers at this time by application of Rule 13e-4 is unnecessary. Accordingly, paragraph (g)(4) of the Rule excludes any tender offer already subject to Section 14(d). 21
B. Issuers Subject to the Reporting Requirements of Section 15d of the Act
As proposed and adopted, the Rule applies to issuers required to file periodic reports under Section 15(d) of the Act as well as to issuers with a class of equity securities registered under Section 12 of the Act and closed-end investment companies registered under the Investment Company Act of 1940. 22 The Commission believes that tender offers by issuers subject to the requirements of Section 15(d) represent the same potential for abuse as other issuer tender offers covered by the Rule, and the commentators set forth no persuasive justification for excluding such issuers.
C. Special Bids
As noted in the 1977 Release, the requirements of the Rule will make virtually impossible an issuers use of the "special bid" technique of acquiring its equity securities through the facilities of a national securities exchange. 23 The Commission has taken the position that a special bid constitutes a tender offer for purposes of Sections 14(d) and 14(e) of the Act, 24 and, as a practical matter, an issuer would not be able to comply, in the context of a special bid, with most of the requirements of the Rule, including those requirements which relate to the withdrawal rights of security holders and pro rata acceptance of tendered securities.
IV. Summary of Rule 13e-4
A. Rule 13e-4a
Paragraph (a) of the Rule defines certain terms used throughout the Rule and Schedule. Although in most instances the meaning of those terms is relatively clear, the terms have been defined in order to minimize unnecessary interpretive questions. The meaning of those terms, however, may vary for purposes of other provisions of the federal securities laws. 25
B. Rule 13e-4b
As proposed, the Rule defined certain fraudulent, deceptive or manipulative acts or practices intended to be prevented by other specific requirements of the Rule. Certain commentators were unclear as to what requirements that section of the Rule was intended to impose, and whether those requirements were in addition to the obligations imposed by other provisions of the Rule. To obviate concern as to whether the Commission intended to introduce unfamiliar concepts of fraud, deceit and manipulation in this context, paragraph (b), as revised, defines fraudulent, deceptive or manipulative acts or practices in more general, traditional terms (as, for example in Rules 10b-5 and 13e-3 under the Act). Issuers and affiliates subject to the Rule are required to comply with this antifraud provision, as well as with the requirements set forth in paragraphs (c), (d), (e) and (f) of the Rule. 26
C. Filing Requirements
Paragraph (c) of Rule 13e-4 imposes three filing obligations on the issuer or affiliate subject to the Rule. First, the person subject to the Rule must file with the Commission ten copies of Schedule 13E-4 17 CFR §240.13E-101 prior to or as soon as practicable on the date of commencement of the issuer tender offer. 27 Second, such person must report any material change in the information set forth in the Schedule by filing with the Commission ten copies of an amendment to the Schedule. Finally, the issuer or affiliate making the tender offer must report the results of the tender offer by filing with the Commission ten copies of a final amendment to the Schedule no later than ten business days after termination of the tender offer.
D. Disclosure and Dissemination Requirements
Rule 13e-4(d) sets forth specifically those terms of the tender offer which the issuer or affiliate is required to disclose to security holders in its offering materials. The offering materials must be disseminated to security holders pursuant to the requirements contained in paragraph (e) of the Rule. The issuer or affiliate will be deemed to have published, sent or given the tender offer to security holders upon compliance with the provisions relating to long-form publication, use of shareholder and other lists or summary publication. 28 If any material change occurs in the information published, sent or given to security holders, the offeror is required by Rule 13e-4(e)(2) to disseminate promptly disclosure of such change in a manner reasonably calculated to inform security holders.
E. Manner of Making the Tender Offer
1. Duration of the Tender Offer
Rule 13e-4(f)(1) requires that an issuer tender offer remain open for at least fifteen business days from the date of commencement of the offer. 29 The Commission believes that the fifteen business days period will provide holders of the securities for which the offer is made with a reasonable opportunity to consider an issuer tender offer, and to make an informed investment decision with respect to the tender offer.
2. Subjects of the Tender Offer and Consideration
As proposed, the Rule would have required that, except in the case of odd lot tender offers, persons subject to the Rule must extend the tender offer to all holders of the class of securities for which the offer is made. Several commentators suggested that, in a few limited contexts, an issuer may have valid business reasons for excluding certain security holders from its tender offer. The Commission has determined not to adopt the explicit requirement proposed at this time. The Commission has also determined not to adopt the provision of the Rule which, as proposed, would have required that issuers expressly offer the same consideration to all security holders to whom a tender offer subject to the Rule is made. 30 However, in light of the Commissions continuing concerns with respect to tender offer practices generally, the Commission has directed the staff to consider in more detail, with a view toward the possibility of further rulemaking, the issuers raised by an express requirement that all persons making tender offers must offer the same consideration to all holders of the security for which the tender offer is made.
3. Withdrawal Rights
The periods during which tendering security holders must be afforded the right to withdraw their securities under the Rule are set forth in paragraph (f)(2) 31 and do not differ in length from the withdrawal rights of the Rule as proposed. Security holders have the right to withdraw tendered securities at any time until the expiration of at least ten business days after the time the tender offer is commenced. This period of time is designed to give security holders who tender their securities soon after commencement of the offer an opportunity to reconsider their investment decision, and to protect such holders from being pressured into accepting the tender offer prior to the time all material facts relating to the tender offer are fully disclosed and disseminated. 32
In the event tendered securities have not been accepted for payment by the issuer, security holders have the right to withdraw their securities at any time after forty business days from the time the offer has commenced. This requirement of the Rule is intended to assure that security holders do not have their shares "locked in" for an unreasonable period of time. 33 In addition, if tendered securities have not been accepted for payment, security holders must be afforded the right to withdraw their securities during the seven business days following the date a Schedule 14D-1 is filed with the Commission relating to a competing tender offer by a subsequent bidder or such tender offer is otherwise commenced. 34 These additional withdrawal rights are intended to permit security holders to respond to a competing tender offer.
4. Pro Rata Acceptance
The requirements of the Rule relating to pro rata acceptance of tendered securities have been adopted substantially as proposed. Paragraph (f)(3) of the Rule requires that where a greater number of securities is tendered than the issuer will accept within at least ten business days of an offer, or within at least ten business days after notice of an increase in consideration is disseminated to security holders, the issuer or affiliate making the tender offer shall accept all such securities on a pro rata basis. The pro rata acceptance requirements of the Rule are based on the policy underlying Section 14(d)(6) of the Act, which was designed to allow all security holders an opportunity to participate in the offer. 35 Moreover, as a means reasonably designed to prevent fraudulent or deceptive conduct, the pro acceptance requirements are intended to prevent an issuer from pressuring security holders, who might otherwise assume that all tendered securities will be accepted on a first come, first served basis, into making hasty, uninformed investment decisions. The ten day pro ration requirements are intended to establish minimum pro rata acceptance periods and do not address the acceptance procedure employed by an offeror beyond those minimum periods. 36
The Rule allows an offeror to permit security holders to tender their securities upon the condition that all, or a specified minimum number, or none of such securities be accepted. In recognition of the conflict between pro rationing and the elimination of odd lots, the Rule permits the offeror to accept odd lots in full prior to accepting other securities on a pro rata basis. Certain commentators questioned whether, in the context of an offer limited to odd lots, pro rata acceptance would be required. Accordingly, a clause has been added to the proviso expressly permitting acceptance by lot in such offers.
5. Increase in Consideration and Payment for Securities
Paragraph (f)(4) of the Rule requires that, if the issuer or affiliate subject to the Rule increases the consideration offered after the tender offer is commenced, the issuer or affiliate must pay the increased consideration to all security holders whose tendered securities are accepted for payment. This requirement is patterned after an analogous provision contained in Section 14(d)(7) of the Act. The so-called "best price" provision was designed "to assure fair treatment of those persons who tender their shares at the beginning of the tender period, and to assure equality of treatment among all shareholders who tender their shares." 37 The Commission believes that the principle embodied in Section 14(d)(7) should be equally applicable in the context of an issuer tender offer. In addition, as a means reasonably designed to prevent fraudulent or deceptive conduct, Rule 13e-4(f)(4) is intended to prevent an issuer from misleading security holders with respect to the price it is willing to pay for the securities which are the subject of the tender offer.
Paragraph (f)(5) of the Rule requires that the person making the issuer tender offer must either pay the consideration offered, or return tendered securities, promptly after termination of the tender offer.
6. Post-Tender Offer Restrictions
As proposed, the Rule would have prohibited, for the ten business days after termination of the offer, any purchases by the issuer of the securities which are the subject of the tender offer. This provision is essentially an antimanipulation restriction. A tender offer tends to peg the market price of the security which is the subject of the tender offer at or near the offering price, and the purpose of the prohibition on post-offer purchasing activity is to prevent the issuer from supporting the market at that artificial price after termination of the tender offer. 38
Certain commentators argued that this prohibition is unnecessary, since market conditions are not as unsettled following an issuer tender offer as in the case of a third party tender offer. Those commentators also noted that, although Rule 10b-13 under the Act prohibits certain purchases of securities which are the subject of a tender offer, it does, unlike Rule 13e-4, except purchases made on behalf of certain employee plans. 39 The Commission continues to believe that this short "cooling-off" period constitutes a reasonable means to ensure that the market impact of the tender offer on the issuers securities is dissipated by market activity unaffected by additional purchases by the issuer. 40
As adopted, the Rule also prohibits, for the ten business days subsequent to the termination of the tender offer, purchases of securities of the same class and series as, or any "right to purchase," 41 the securities which are the subject of the tender offer. Similarly, in the context of exchange offers, the Rule prohibits purchases by the issuer of any security in a control relationship with the issuer of any security being offered pursuant to the exchange offer, or any security of the same class and series as, or any right to purchase, any such security. Market activity in these securities may affect the market price for the security which is the subject of the tender offer, or the security offered pursuant to an exchange offer. Accordingly, issuer purchases of those classes of securities may tend to peg the price of the security which is the subject of the tender offer at or near the tender offer price or distort the market for the offered security in an exchange offer.
Although Rule 13e-4 specifically excepts any tender offer subject to Section 14(d) of the Act, which includes tender offers by affiliates of most issuers covered by the Rule, the Commission believes that purchases of the securities covered by paragraph (f)(6) of the Rule by persons in a control relationship with the issuer during the ten day period following termination of the offer may have the same adverse market effects as purchases by the issuer. Accordingly, for purposes of paragraph (f)(6), post-offer purchases by control persons of the issuer shall be deemed to be purchases by the issuer.
V. Disclosure Requirements-Schedule 13E-4
Schedule 13E-4 has been adopted substantially as proposed. The substantive changes to the Schedule are discussed in this section.
As proposed, General Instruction D required that the issuer or affiliate making the tender offer must promptly file a final amendment to the Schedule setting forth the results of the tender offer. The term "promptly," in the context of this instruction, has been clarified to mean within ten business days of termination of the offer.
Item 1 of the Schedule as proposed would require disclosure of certain information regarding the issuer and the securities which are the subject of the tender offer. In response to comments, certain changes have been made. The text of Item 1(b) has been amended by requiring disclosure of the "amount of securities" outstanding "as of the most recent practicable date," rather than the "number of shares outstanding of the class of securities being sought." These changes were made because the Rule will apply to tender offers for equity securities other than "shares" of stock, and because compliance with this requirement would be unnecessarily burdensome if the disclosure of the amount of securities outstanding was required to be as of the date of the filing of the Schedule 13E-4.
Item 4 of the Schedule requires disclosure of recent transactions in an issuers securities by certain persons affiliated with the issuer. Several commentators suggested that, in light of the number of persons as to whom such information must be obtained, the two business day period provided in Instruction 2 of the Item would be inadequate for the gathering and filing of such information.
Accordingly, the Commission has expanded this period to ten business days, which should be adequate to achieve the purpose of the provision, yet preserve the confidentiality of the tender offer. The Commission believes that the ten business day period obviates the need, suggested by certain commentators, to restrict the size of the class of persons with respect to whom such information must be filed. Finally, the Commission does not believe that the expanded period will preclude dissemination to security holders of any material information obtained and filed within such period prior to termination of the offer.
As published for comment, Item 5 of the Schedule would have required the disclosure of any contract, arrangement, understanding or relationship between the issuer and any person with respect to any securities of the issuer. The Commission agrees with the commentators that the requirement is unnecessarily board, and, accordingly, Item 5 has been revised to provide for disclosure only of such contracts, arrangements, understandings or relationships which relate, directly or indirectly, to the tender offer.
As published for comment, Schedule 13E-4 did not contain an item specifically requiring disclosure of material financial information concerning the issuer. In the case of a registered exchange offer, of course, the Commissions registration forms under the Securities Act of 1933 require disclosure of a registrants financial operations and conditions. To make it clear that there is a corresponding disclosure requirement for cash tender offers, the Commission has added to Schedule 13E-4 a specific item which requires disclosure of certain financial information, if material. In addition the person making the issuer tender offer may be required under Item 7(b) to disclose, if material, pro forma data with respect to the effect of the tender offer on, for example, the issuers most recent balance sheet.
V. Certain Findings, Operation of Rule Adopted, Effective Date
As required by Section 23(a)(2) of the Act, the Commission has specifically considered the impact which Rule 13e-4 and Schedule 13E-4 as adopted herein will have on competition. The Commission finds that compliance with the Rule by persons subject thereto will not impose any significant burden on competition.
Rule 13e-4 and Schedule 13E-4 will become effective 30 days after publication in the Federal Register. The Rule and Schedule are not applicable to tender offers which have commenced within the meaning of Rule 13e-4(a)(4) prior to the effective date.
TEXT OF ADOPTED RULE AND SCHEDULE
The following actions are taken:
17 CFR Part 240 is amended by adding §240.13e-4 and §240.13e-101 as follows:
§240.13e-4 Tender offers by issuers.
(a) Definitions.
Unless the context otherwise requires, all terms used in this section and in schedule 13E-4 §240.13E-101 shall have the same meaning as in the Act or elsewhere in the General Rules and Regulations thereunder. In addition, the following definitions shall apply:
(1) The term "issuer" means any issuer which has a class of equity security registered pursuant to section 12 of the Act, or which is required to file periodic reports pursuant to section 15(d) of the Act, or which is a closed-end investment company registered under the Investment Company Act of 1940.
(2) The term "issuer tender offer" refers to a tender offer for, or a request or invitation for tenders of, any class of equity security, made by the issuer of such class of equity security or by an affiliate of such issuer.
(3) The term "business day" means any day, other than Saturday, Sunday or a federal holiday, on which the principal office of the Commission at Washington, D.C. is scheduled to be open for business. In computing any time period under this section, the date of commencement of the issuer tender offer shall be included.
(4) The term "commencement" means the date an issuer tender offer is first published, sent or given to security holders.
(5) The term "termination" means the date after which securities may not be tendered pursuant to an issuer tender offer.
(6) The term "security holders" means holders of record and beneficial owners of securities of the class of equity security which is the subject of an issuer tender offer.
(7) The term "executive officer" means the president, secretary, treasurer, any vice president in charge of a principal business function (such as sales, administration or finance) or any other person who performs similar policy making functions for a corporation.
(8) The term "security position listing" means, with respect to the securities of any issuer held by a registered clearing agency in the name of the clearing agency or its nominee, a list of those participants in the clearing agency on whose behalf the clearing agency holds the issuers securities and of the participants respective positions in such securities as of a specified date.
(b)(1) It shall be a fraudulent, deceptive or manipulative act or practice, in connection with an issuer tender offer, for an issuer or an affiliate of such issuer, in connection with an issuer tender offer:
(i) to employ any device, scheme or artifice to defraud any person;
(ii) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
(iii) to engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person.
(2) As a means reasonably designed to prevent fraudulent, deceptive or manipulative acts or practices in connection with any issuer tender offer, it shall be unlawful for an issuer or an affiliate of such issuer to make an issuer tender offer unless:
(i) such issuer or affiliate complies with the requirements of paragraphs (c), (d), (e) and (f) of this section; and
(ii) the issuer tender offer is not in violation of paragraph (b)(1) of this section.
(c) Material required to be filed.
The issuer or affiliate making the issuer tender offer shall, in accordance with the General Instructions to the Issuer Tender Offer Statement on Schedule 13E-4 (§240.13E-101):
(1) File with the Commission ten copies of such schedule, including all exhibits thereto, prior to or as soon as practicable on the date of commencement of the issuer tender offer;
(2) Report any material change in the information set forth in such schedule by promptly filing with the Commission ten copies of an amendment on such schedule;
(3) Report the results of the issuer tender offer by filing with the Commission no later than ten business days after the termination of the issuer tender offer ten copies of a final amendment to such schedule.
(d) Disclosure of certain information.
(1) The issuer or affiliate making the issuer tender offer shall publish, send or give to security holders in the manner prescribed in paragraph (e)(1) of this section a statement containing the following information:
(i) the scheduled termination date of the issuer tender offer and whether it may be extended;
(ii) the specified dates prior to which, and after which, persons who tender securities pursuant to the issuer tender offer may withdraw their securities pursuant to paragraph (f)(2) of this section;
(iii) if the issuer tender offer is for less than all the securities of a class, the exact dates of the period during which securities will be accepted on a pro rata basis pursuant to paragraph (f)(3) of this section and the manner in which securities will be accepted for payment and in which securities may be withdrawn; and
(iv) the information required by Items 1 through 8 of Schedule 13E-4 §240.13e-101 or a fair and adequate summary thereof.
provided, however, That if the issuer tender offer involves the registration of securities pursuant to the Securities Act of 1933 and the General Rules and Regulations promulgated thereunder, any prospectus relating to such securities shall include all of the information, not otherwise required to be included therein, required by this paragraph.
(2) If any material change occurs in the information previously disclosed to security holders, the issuer or affiliate shall disclose promptly such change in the manner prescribed by paragraph (e)(2) of this section.
Instruction:
A. Negative responses to any item of Schedule 13E-4 need not be included in the statement published, sent or given to security holders.
B. Although the financial information necessary to present a fair and adequate summary of Item 7 of Schedule 13E-4 may vary depending on the facts and circumstances involved, the following historical and pro forma summary financial information normally will be sufficient for purposes of paragraph (d)(1)(iv) of this section:
(1) Summary financial information equivalent to that required by paragraph (e) of Guide 59 of the Guides for Preparation and Filing of Registration Statements for (i) the two most recent fiscal years, and (ii) the latest year-to-date interim period and corresponding interim period of the preceding year;
(2) Ratio of earnings to fixed charges for the same periods required by B(1) above;
(3) Book value per share as of the most recent fiscal year end and as of the date of the latest interim balance sheet; and
(4) If material, pro forma data for the summarized financial information described in B(1), (2) and (3) above, disclosing the effect of the tender offer, should be provided for the most recent fiscal year and latest year-to-date interim period.
If the information required by Item 7 is summarized, appropriate instructions should be included stating how more complete financial information can be obtained.
(3) If an issuer or an affiliate publishes, sends or gives the issuer tender offer to security holders by means of a summary publication in the manner prescribed in paragraph (e)(1)(iii) of this section, the summary advertisement shall not contain a transmittal letter pursuant to which securities which are sought in the issuer tender offer may be tendered, and shall disclose only the following information:
(i) the identity of the issuer or affiliate making the issuer tender offer;
(ii) the amount and class of securities being sought and the price being offered;
(iii) the information required by paragraphs (d)(1)(i)-(iii) of this section;
(iv) a statement of the purpose of the issuer tender offer;
(v) appropriate instructions for security holders regarding how to obtain promptly, at the expense of the issuer or affiliate making the issuer tender offer, the statement required by paragraph (d)(1) of this section; and
(vi) a statement that the information contained in the statement required by paragraph (d)(1) of this section is incorporated by reference.
(e) Dissemination of tender offers.
(1) The issuer or affiliate making the issuer tender offer will be deemed to have published, sent or given the issuer tender offer to security holders if such issuer or affiliate complies fully with one or more of the following methods of dissemination. Depending on the facts and circumstances involved, and for purposes of paragraphs (e)(1)(i) and (e)(1)(iii) of this section, adequate publication of the issuer tender offer may require publication in a newspaper with a national circulation or may require only publication in a newspaper with metropolitan or regional circulation or may require publication in a combination thereof.
(i) Dissemination of cash issuer tender offers by long-form publication:
By making adequate publication in a newspaper or newspapers, on the date of commencement of the issuer tender offer, of the statement required by paragraph (d)(1) of this section.
(ii) Dissemination of any issuer tender offer by use of shareholder and other lists:
(A) By mailing the statement required by paragraph (d)(1) of this section to each security holder whose name appears on the most recent shareholder list of the issuer;
(B) By contacting each participant named on the most recent security position listing of any clearing agency within the possession or access of the issuer or affiliate making the tender offer, and making inquiry of each such participant as to the approximate number of beneficial owners of the securities for which the issuer tender offer is made which are held by such participant;
(C) By furnishing to each such participant a sufficient number of copies of the statement required by paragraph (d)(1) of this section for transmittal to the beneficial owners; and
(D) By agreeing to reimburse promptly each such participant for reasonable expenses incurred by it in forwarding such statement to the beneficial owners.
(iii) Dissemination of certain cash issuer tender offers by summary publication:
(A) If the issuer tender offer is not subject to Rule 13e-3(§240.13e-3), by making adequate publication in a newspaper or newspapers, on the date of commencement of the issuer tender offer, of a summary advertisement containing the information required by paragraph (d)(3) of this section; and
(B) By mailing or otherwise furnishing promptly the statement required by paragraph (d)(1) of this section and a transmittal letter to any security holder who requests either a copy of such statement or a transmittal letter.
(2) If a material change occurs in the information published, sent or given to security holders, the issuer or affiliate shall disseminate promptly disclosure of such change in a manner reasonably calculated to inform security holder of such change.
(f) Manner of making tender offer.
(1) The issuer tender offer, unless withdrawn shall remain open until the expiration of at least fifteen business days from its commencement.
(2) The issuer or affiliate making the issuer tender offer shall permit securities tendered pursuant to the issuer tender offer to be withdrawn
(i) at any time until the expiration of ten business days from the commencement of the issuer tender offer;
(ii) if not yet accepted for payment, at any time until the expiration of seven business days from the date another tender offer for securities of the same class is first published, sent or given to security holders, pursuant to Section 14(d)(1) of the Act or otherwise; and
(iii) if not yet accepted for payment, after the expiration of forty business days from the commencement of the issuer tender offer.
(3) The issuer of affiliate making the issuer tender offer shall accept tendered securities as nearly as practicable on a pro rata basis (disregarding fractions) according to the amount of securities tendered by each security holder if the amount of securities tendered within ten business days (or such longer period as may be specified) from the commencement of the issuer tender offer exceeds the amount of securities that will be accepted. The provisions of this paragraph shall also apply to securities tendered within ten business days (or such longer period as may be specified) from the date notice of an increase in the consideration offered to security holders, as described in paragraph (f)(4) of this section, is first published, sent or given to security holders;
Provided, however, That this provision shall not prohibit the issuer or affiliate making the issuer tender offer from
(i) accepting all securities tendered by persons who own, beneficially or of record, an aggregate of not more than a specified number which is less than one hundred shares of such security and who tender all their securities, before prorating securities tendered by others, or, in the case of tender offer limited to such persons, accepting tendered securities by lot; or
(ii) accepting by lot securities tendered by security holders who tender all securities held by them and who, when tendering their securities, elect to have either all or none accepted, if the issuer or affiliate first accepts all securities tendered by security holders who do not so elect;
(4) In the event the issuer or affiliate making the issuer tender increases the consideration offered after the issuer tender offer has commenced, such issuer or affiliate shall pay such increased consideration to all security holders whose tendered securities are accepted for payment by such issuer or affiliate.
(5) The issuer or affiliate making the tender offer shall either pay the consideration offered, or return the tendered securities, promptly after the termination or withdrawal of the tender offer.
(6) Until the expiration of at least ten business days after the date of termination of the issuer tender offer, neither the issuer nor any affiliate shall make any purchases, otherwise than pursuant to the tender offer, of:
(i) any security which is the subject of the issuer tender offer, or any security of the same class and series, or any right to purchase any such securities; and
(ii) in the case of an issuer tender offer which is an exchange offer, any security being offered pursuant to such exchange offer, or any security of the same class and series, or any right to purchase any such security.
(g) This section shall not apply to:
(1) Calls or redemptions of any security in accordance with the terms and conditions of its governing instruments;
(2) Offers to purchase securities evidenced by a scrip certificate, order form or similar document which represents a fractional interest in a share of stock or similar security;
(3) Offers to purchase securities pursuant to a statutory procedure for the purchase of dissenting security holders securities;
(4) Any tender offer which is subject to section 14(d) of the Act; or
(5) Any other transaction or transactions, if the Commission, upon written request or upon its own motion, exempts such transaction or transactions, either unconditionally, or on specified terms and conditions, as not constituting a fraudulent, deceptive or manipulative act or practice comprehended within the purpose of this section.
§240.13e-101 Schedule 13E-4. Tender offer statement pursuant to section 13(e)(1) of the Securities Exchange Act of 1934 and §240.13e-4 thereunder.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934)
(Amendment No.________________________)
____________________________________________________
(Name of Issuer)
____________________________________________
(Name of Person(s) Filing Statement)
__________________________________________________________________________________
(Title of Class of Securities)
____________________________________________________________________________________
CUSIP Number of Class of Securities)
____________________________________________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
______________________________________________________________________________________
(Date Tender Offer First Published,
Sent or Given to Security Holders)
Instruction. Ten Copies of this statement, including all exhibits, shall be filed with the Commission.
General Instructions. A. The item numbers and captions of the items shall be included but the text of the items is to be omitted. The answers to the items shall be so prepared as to indicate clearly the coverage of the items without referring to the text of the items. Answer every item. If an item is inapplicable or the answer is in the negative so state.
B. Information contained in exhibits to the statement or in a filing by the issuer may be incorporated by reference in answer or partial answer to any item or sub-item of the statement unless it would render such answer incomplete, unclear or confusing. Matter incorporated by reference shall be clearly identified in the reference by page, paragraph, caption or otherwise. An express statement that the specified matter is incorporated by reference shall be made at the particular place in the statement where the information is required. A copy of any information or a copy of the pertinent pages of a document containing such information which is incorporated by reference shall be submitted with this statement as an exhibit and shall be deemed to be filed with the Commission for all purposes of the Act.
C. If the statement is filed by a general or limited partnership, syndicate or other group, the information called for by Items 2-5, inclusive, shall be given with respect to (i) each partner of such general partnership; (ii) each partner who is denominated as a general partner or who functions as a general partner of such limited partnership; (iii) each member of such syndicate or group; and (iv) each person controlling such partner or member. If the statement is filed by a corporation, or if a person referred to in (i), (ii), (iii) or (iv) of this Instruction is a corporation, the information called for by Items 2-5, inclusive, shall be given with respect to (a) each executive officer and director of such corporation; (b) each person controlling such corporation; and (c) each executive officer and director of any corporation ultimately in control of, such corporation.
(D) Upon termination of the tender offer, the person filing this statement shall promptly, but in no event later than ten business days after the termination of the tender offer, file a final amendment to Schedule 13E-4 (§240.13E-100) disclosing all material changes in the information set forth in such statement and stating that the tender offer has terminated, the date of such termination and the results of such tender offer.
E. Amendments disclosing a material change in the information set forth in this statement may omit information previously disclosed in this statement.
ITEM 1. Security and Issuer.
(a) State the name of the issuer and the address of its principal executive office;
(b) State the exact title and the amount of securities outstanding of the class of security being sought as of the most recent practicable date; the exact amount of such securities being sought and the consideration being offered therefor; whether any such securities are to be purchased from any officer, director or affiliate of the issuer, and the details of each such transaction; and
(c) Identify the principal market in which such securities are being traded and, if the principal market is an exchange, state the high and low sales prices for such securities as reported in the consolidated transaction reporting system or, if not so reported, on such principal exchange for each quarterly period during the past two years. If the principal market is not an exchange, state the range of high and low bid quotations for each quarterly period during the past two years, the source of such quotations, and if there is currently no established trading market for such securities (excluding limited or sporadic) furnish a statement to that effect.
(d) State the name and address of the person filing this statement, if other than the issuer, and the nature of the affiliation between such person and the issuer.
ITEM 2. Source and Amount of Funds or Other Consideration.
(a) State the source and total amount of funds or other consideration for the purchase of the maximum amount of securities for which the tender offer is being made.
(b) If all or any part of such funds or other consideration is, or is expected to be borrowed, directly or indirectly, for the purpose of the tender offer:
(1) Provide a summary of each such loan agreement or arrangement containing the identity of the parties, the term, the collateral, the stated and effective interest rates, and other material terms or conditions relative to such loan agreement; and
(2) Briefly describe any plans or arrangements to finance or repay such borrowings, or if no such plans or arrangements have been made, make a statement to that effect.
ITEM3.
Purpose of the Tender Offer and Plans or Proposals of the Issuer or Affiliate.
State the purpose or purposes of the tender offer, and whether the securities are to be retired, held in the treasury of the issuer, or otherwise disposed of, indicating such disposition, and any plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the issuer, or the disposition of securities of the issuer;
(b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management of the issuer including, but not limited to, any plans or proposals to change the number or the term of directors, to fill any existing vacancy on the board or to change any material term of the employment contract of any executive officer;
(e) any material change in the present dividend rate or policy, or indebtedness or capitalization of the issuer;
(f) Any other material change in the issuers corporate structure or business, including, if the issuer is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote would be required by Section 13 of the Investment Company Act of 1940;
(g) Changes in the issuers charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the issuer by any person;
(h) Causing a class of equity security of the issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;
(i) A class of equity security of the issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or
(j) The suspension of the issuers obligation to file reports pursuant to Section 15(d) of the Act.
ITEM 4. Interest in Securities of the Issuer.
Describe any transaction in the class of subject security that was effected during the past 40 business days by the issuer or the person filing this statement, by any person referred to in Instruction C of this schedule or by any associate or subsidiary of any such person, including any executive officer or director of any such subsidiary.
Instructions. 1. The description of a transaction required by this Item shall include, but not necessarily be limited to: (1) the identity of the person covered by this Item who effected the transaction; (2) the date of the transaction; (3) the amount of securities involved; (4) the price per security; and (5) where and how the transaction was effected.
2. If the information required by this Item is available to the person filing this statement at the time this statement is initially filed with the Commission, the information should be included in the initial filing. However, if the information is not available to such person at the time of such initial filing, it shall be filed with the Commission promptly but in no event later than ten business days after such date of the filing and, if material, should be disclosed to security holders of the issuer in a manner reasonably calculated to inform security holders.
ITEM 5.
Contracts, Arrangements, Understandings or Relationships With Respect to the Issuers Securities.
Describe any contract, arrangement, understanding or relationship relating, directly or indirectly, to the tender offer (whether or not legally enforceable) between the person filing this statement (including any person enumerated in Instruction C of this schedule) and any person with respect to any securities of the issuer (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss, or the giving or withholding of proxies, consents or authorizations) naming the persons with whom such contracts, arrangements, understandings or relationships have been entered into and giving the material provisions thereof. Include such information for any of such securities that are pledged or otherwise subject to a contingency, the occurrence of which would give another person the power to direct the voting or disposition of such securities, except that disclosure of standard default and similar provisions contained in loan agreements need not be included.
ITEM 6.
Persons Retained, Employed or to be Compensated.
Identify all persons and classes of persons employed, retained or to be compensated by the person filing this statement, or by any person on behalf of the person filing this statement, to make solicitations or recommendations in connection with the tender offer, and provide a summary of the material terms of such employment, retainer or arrangement for compensation.
ITEM 7. Financial Information.
(a) If Material, furnish the following financial data of the issuer:
(1) Audited financial statements for the two fiscal years required to be filed with the issuers most recent annual report under Section 13 and 15(d) of the Act;
(2) Unaudited balance sheets and comparative year-to-date income statements and statements of changes in financial position and related earnings per share amounts required to be included in the issuers most recent quarterly report filed pursuant to the Act;
(3) Ratio of earnings to fixed changes for the two most recent fiscal years and the interim periods provided under Item 7(a)(2); and
(4) Book value per share as of the most recent fiscal year end and as of the date of the latest interim balance sheet provided under Item 7(a)(2).
(b) If material, provide pro forma data disclosing the effect of the tender offer on:
(1) The issuers balance sheet as of the most recent fiscal year end and the latest interim balance sheet provided under Item 7(a)(2);
(2) The issuers statement of income, earnings per share amounts, and ratio of earnings to fixed charges for the most recent fiscal year and the latest interim period provided under Item 7(a)(2); and
(3) The issuers book value per share as of the most recent fiscal year end and as of the latest interim balance sheet date provided under Item 7(a)(2).
ITEM 8. Additional information.
If material to a decision by a security holder whether to sell, tender or hold securities being sought in the tender offer, furnish information including, but not limited to, the following:
(a) Any present or proposed contracts, arrangements, understandings or relationships between the issuer and its executive officers, directors or affiliates (other than any contract, arrangement or understanding required to be disclosed pursuant to Item 5 of this schedule);
(b) Any applicable regulatory requirements which must be complied with or approvals which must be obtained in connection with the tender offer;
(c) The applicability of the margin requirements of Section 7 of the Act and the regulation promulgated thereunder;
(d) Any material pending legal proceedings relating to the tender offer, including the name and location of the court or agency in which the proceedings are pending, the date instituted, the principal parties thereto and a brief summary of the proceedings and the relief sought; and
Instruction. In connection with sub-item (d), a copy of any document relating to a major development (such as pleadings, an answer, complaint, temporary restraining order, injunction, opinion, judgment or order) in a material pending legal proceeding should be furnished promptly to the Commission on a supplemental basis.
(e) Such additional material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not materially misleading.
ITEM 9. Material to be filed as exhibits.
Furnish a copy of:
(a) Tender offer material which is published, sent or given to security holders by or on behalf of the person filing this statement in connection with the tender offer;
(b) Any loan agreement referred to in Item 2 of this schedule.
(c) Any document setting forth the terms of any contract, arrangements, understandings or relationships referred to in Items 5 or 8(a) of this Schedule;
(d) Any written opinion prepared by legal counsel at the request of the person filing this statement and communicated to such person pertaining to the tax consequences of the tender offer;
(e) In an exchange offer where securities of the issuer have been or are to be registered under the Securities Act of 1933, any prospectus filed with the Commission in connection with the registration statement; and
(f) If any oral solicitation of security holders is to be made by or on behalf of the person filing this statement, any written instruction, form or other material which is furnished to the persons making the actual oral solicitation for their use, directly or indirectly, in connection with the tender offer.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
__________________________
(Date)
__________________________________
(Signature)
____________________________________
(Name and title)
The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of the person filing this statement) evidence of the representatives authority to sign on behalf of such person shall be filed with the statement. The name and any title of each person who signs the statement shall be typed or printed beneath his signature.
AUTHORITY
The Commission hereby adopts Rule 13e-4 and Schedule 13E-4 pursuant to Sections 3(b), 9(a)(6), 10(b), 13(e), 14(e), 15(c)(1) and 23(a) of the Securities Exchange Act of 1934.
Secs. 3(b), 9(a)(6), 10(b), 13(e), 14(e), 15(c)(1), 23(a), 48 Stat. 882, 889, 891, 894, 895, 901, Sec. 8, 49 Stat. 1379, Sec. 5, 78 Stat. 569, 570, Secs. 2, 3, 82 Stat. 454, 455, Secs. 1, 2, 3-5, 84 Stat. 1497, Secs. 3, 18, 89 Stat. 97, 155 (15 U.S.C. 78c(b), 78i(a), 78j(b), 78m(e), 78n(e), 78o(c), 78w(a)).
By the Commission.
George A. Fitzsimmons
Secretary
1 Securities Exchange Act Release No. 34-16075 (August 2, 1979), 44 FR 46736.
2 It should be noted that General Instruction B to Schedule 13E-4 provides that information required to be disclosed in Schedule 13e-4 may incorporate by reference information disclosed in other filings by the issuer.
3 Securities Exchange Act Release No. 34-14234 (December 14, 1977), 42 FR 63066 ("1977 Release").
4See 1977 Release, 42 FR at 63066.
5 Securities Exchange Act Release Nos. 34-12676 (August 2, 1976), 41 FR 33004; 34-15548 (February 5, 1979), 44 FR 9956 (the "February Proposals"). To the extent that certain of the provisions of Rule 13e-4 differ from the requirements of any of the February Proposals which are adopted, the Commission may consider whether to amend Rule 13e-4 or the February Proposals to conform the requirements of both rules.
6 Schedule 14D-1 was adopted by the Commission in July 1977. Securities Exchange Act Release No. 34-13787 (July 21, 1977). The Division of Corporation Finance will be responsible for reviewing the filings on Schedule 13E-4 by persons subject to the Rule. Accordingly, inquiries with respect to the disclosure obligations imposed by specific items of Schedule 13e-4 should be directed to that Division. All other interpretative questions with respect to the Rule should be directed to the Division of Market Regulation.
7See 1977 Release, 42 FR at 63066. Rule 10b-13 under the Act §240.10b-13 prohibits any offeror engaged in a tender offer for equity securities from making purchases of such securities, otherwise than pursuant to the tender during the offering period defined by that rule. Rule 10b-6 under the Act §240.10b-6 prohibits purchases by an issuer of its own securities pursuant to a tender offer (or otherwise) if the issuer is engaged in a distribution of securities of the same class as those for which the tender offer is to be made, or if the tender offer is for securities which constitute "rights to purchase" such securities. In appropriate cases, the Commission has granted exemptions from Rule 10b-6 to permit purchases by an issuer of such securities pursuant to a tender offer, conditioned on compliance with requirements substantially similar to Sections 14(d)(5)-(7) of the Act. As a result of the adoption of Rule 13e-4, it will no longer be necessary to secure undertakings to abide by these requirements in the context of grants of exemptive relief under Rule 10b-6. The Commission intends to amend Rule 10b-6 in the near future to provide that if the provisions of that rule would apply to bids for or purchases of a security by the issuer pursuant to a tender offer solely because the issuer has outstanding securities convertible into or exchangeable for such security, such provisions shall not apply to such bids or purchases if made in accordance with the requirements of Rule 13e-4. Pending the amendment to Rule 10b-6, however, an issuer still will have to seek relief from that rule if it is engaged in a distribution of the securities for which the tender offer is to be made.
8 In addition to Sections 13(e) and 14(e), the Rule has been adopted under Sections 3(b), 9(a)(6), 10(b), 15(c)(1) and 23(a) of the Act.
9 P.L. No. 90-439, 82 Stat. 454 (July 29, 1968).
10See Report of the Senate Committee on Banking and Currency to Accompany S. 510, 90th Cong., 1st Sess., at 1-4 (1967) ("Senate Report"); Hearings on S.510 Before the Subcommittee on Securities of the Senate Comm. on Banking and Currency, 90th Cong., 1st Sess, at 115-16 (1967) ("Senate Hearings")
11See Section 14(d)(8)(B).
12 Section 13(e)(1) states in pertinent part that:
It shall be unlawful for an issuer which has a class of equity securities registered pursuant to Section 12 of this title, or which is a closed-end investment company registered under the Investment Company Act of 1940, to purchase any equity security issued by it if such purchase is in contravention of such rules and regulations as the Commission, in the public interest or for the protection of investors, may adopt (A) to define acts and practices which are fraudulent, deceptive, or manipulative, and (B) to prescribe means reasonably designed to prevent such acts and practices.
13 Section 14(e) states that:
It shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in opposition to or in favor of any such offer, request, or invitation. The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, such acts and practices as are fraudulent, deceptive or manipulative.
14 Securities Exchange Act Release No. 34-14185 (November 23, 1977), 42 FR 60090.
15See letter dated March 24, 1967 to Senator Harrison A. Williams, Jr., from Milton Cohen, Esq., reprinted in Senate Hearings, at 248.
16Supplemental Memorandum of the Securities and Exchange Commission With Respect to Certain Comments of S.510, Senate Hearings at 202. In addition, during consideration of the Williams Act, the Commission submitted to Congress a draft of Rule 10b-10 under the Act, which would have regulated most forms of issuer repurchases, including repurchases by means of tender offers. The draft rule, which was made a part of the record during the hearings on the Williams Act, was intended to indicate to Congress the manner in which the Commission might exercise its rulemaking authority under Section 13(e). The provisions of the draft rule relating to tender offers by issuers would have prohibited issuers from engaging in certain of the practices Congress was concerned with in the context of third party tender offers.
17Id.
18 As discussed in the release proposing and adopting Rule 13e-3 under the Act §240.13e-3, the Commission believes that it would be appropriate to imply a private right of action under Section 13(e). See Securities Exchange Act Release Nos. 34-14185 (November 23, 1977), 41 FR 60099-60100; 34-16075 (August 2, 1979), 44 FR 46736. The Commission adheres to this view in the context of Rule 13e-4.
19 Section 13(e)(2) provides that purchases of an issuers securities by persons in a control relationship with the issuer are deemed to be purchases by the issuer.
20See 1977 Release, 42 FR at 63068.
21 However, persons in a control relationship with any issuer covered by the Rule are subject to the restrictions of Rule 13e-4(f)(6), which apply to purchases of securities for which the offer is made after the termination of the offer.
22 Certain of the commentators questioned the Commissions authority to include issuers subject to Section 15(d) within the scope of the Rule. However, the Rule also has been adopted under Section 14(e), which gives the Commission rulemaking authority to regulate any tender offer.
23 42 FR at 63068.
24See Securities Exchange Act Release No. 8392 (August 30, 1968), 33 FR 14109.
25 for example, a tender offer may be "publicly announced or otherwise made known" to security holders, thereby triggering the restrictions of Rule 10b-13, prior to the commencement date of the offer as defined by Rule 13e-4. Further, an issuer tender offer will be deemed to have terminated, for purposes of Rule 13e-4, at the time after which securities may not be tendered pursuant to the offer. In contrast, in the case of a tender offer for less than all securities of a class, Rule 10b-13 would continue to apply until the offeror announces a definitive acceptance rate with respect to securities tendered pursuant to the offer.
26 In this regard, of course, tender offers covered by Rule 13e-4 continue to be subject to other applicable provisions of the federal securities laws (e.g., Section 10(b) and Rule 10b-5 thereunder and Section 14(e)).
27 The term "commencement" is defined in the Rule to mean the time the issuer tender offer is first published, sent or given to security holders. An issuer or affiliate subject to the Rule will be deemed to have published, sent or given the tender offer to security holders upon compliance with the dissemination requirements of Rule 13e-4(e).
28 If the tender offer is subject to Rule 13e-3, however, summary publication is not permissible. See Rule 13e-3(e)-(f).
29 The Commission, in the near future, will publish for comment a proposed amendment to Rule 13e-4 which would require that the issuer extend the period of the tender offer following the date that notice of a material change in the terms of the offer is disseminated to security holders.
30 Pending further study, the Commission believes that existing interpretations of Rules 10b-6 and 10b-13 under the Act §240.10b-6, §240.10b-13 by the Division of Market Regulation will adequately protect the public from abusive practices.
31 In addition to publishing for comment an amendment to the Rule which would require that the issuer extend the duration of the tender offer under certain circumstances, the Commission also will publish for comment a proposed amendment to Rule 13e-4 which would require that an issuer afford additional withdrawal rights following the date that the notice of a material change in the terms of the tender offer is disseminated to security holders.
32See 1977 Release, 42 FR at 63067; Senate Report at 10.
33Id.
34 The addition of the clause "or such tender offer is otherwise commenced" is designed to assure that withdrawal rights are afforded in the context of an issuer tender offer by an issuer required to file reports with the Commission under Section 15(d), since a competing offeror would not be required to file a Schedule 14D-1.
35See Senate Report at 10.
36 As proposed, the Rule expressly would have permitted the issuer to accept all securities tendered during the term of the tender offer on a pro rata basis. An incorrect inference may have been drawn that the Rule would prohibit pro rationing from some specified period beyond the first ten business days but short of the full term of the offer. The Rule has been modified to eliminate this ambiguity.
37See Senate Report at 10.
38 In light of this potential effect on the market of an issuers post-offer purchasing activity, the Commission has adopted the Rule, among other provisions, under Section 9(a)(6) and 15(c)(1) of the Act.
39 The Commission does not believe that the short term of the ten-day prohibition presents any significant operational impediment to issuer purchases on behalf of employee plans, particularly in view of the potential for manipulative activity during that period.
40 As an alternative to the ten-day prohibition on purchases, the Commission solicited comment on whether it would be preferable to provide that any post-tender offer purchases by the issuer for forty business days be made at the highest price paid in the tender offer. The commentators generally preferred the approach taken in the Rule, and the Commission believes that this approach is appropriate in the context of issuer tender offers.
41 The terms "same class and series" and "right to purchase" as used in the Rule generally should be interpreted as those terms are used in the context of Rule 10b-6 under the Act §240.10b-6.
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